Perilous Reversal Stock: First Majestic Silver (AG)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified First Majestic Silver ( AG) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified First Majestic Silver as such a stock due to the following factors:

  • AG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.3 million.
  • AG has traded 64,236 shares today.
  • AG is down 4.6% today.
  • AG was up 5.5% yesterday.

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More details on AG:

First Majestic Silver Corp. acquires, develops, and explores mineral properties with a focus on silver projects in Mexico. Currently there are 4 analysts that rate First Majestic Silver a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for First Majestic Silver has been 1.5 million shares per day over the past 30 days. First Majestic has a market cap of $626.3 million and is part of the basic materials sector and metals & mining industry. Shares are down 49.8% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates First Majestic Silver as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 38.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • AG's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.22, which illustrates the ability to avoid short-term cash problems.
  • 36.16% is the gross profit margin for FIRST MAJESTIC SILVER CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.34% trails the industry average.
  • This stock's share value has moved by only 55.32% over the past year. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, FIRST MAJESTIC SILVER CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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